THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEO CLIP)

ANNOUNCER: Tonight on CROSSFIRE, looking beyond the holidays.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Are you kidding me?

ANNOUNCER: Where are the political battle lines for 2014?

REP. TED CRUZ (R), TEXAS: It's time to start over.

ANNOUNCER: Who should we keep our eyes on?

HILLARY CLINTON, FORMER SECRETARY OF THE STATE: What difference at this point does it make?

ANNOUNCER: And what will be the biggest issues?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We anticipate there's still going to be challenges.

ANNOUNCER: On the left Marc Lamont Hill, on the right S.E. Cupp. In the CROSSFIRE, Neera Tanden, who worked for the Obama administration, and Will Cain, a conservative commentator, drawing the battle lines for 2014. Tonight on CROSSFIRE.

S.E. CUPP, CO-HOST: I'm S.E. Cupp on the right. In the CROSSFIRE tonight, two guests on opposite sides of the 2014 battle lines.

Democrats are addicted to Obama. And the first step for any addict is admitting they have a problem. Obama's health-care law is riddled with it. Just today the administration put off another deadline to sign up, and according to new CNN polling, 63 percent of Americans think the Affordable Care Act will increase their health-care spending.

Here's Democrat Joe Manchin on CNN's "STATE OF THE UNION."

(BEGIN VIDEO CLIP)

SEN. JOE MANCHIN (R), WEST VIRGINIA: If it's so much more expensive than what we anticipated, and if the coverage is not as good as what we've had, you've got a complete meltdown at that time.

(END VIDEO CLIP)

CUPP: Also today we learned the president symbolically signed up for Obamacare, something he doesn't need and is yet still paying for. Must be nice.

Marc, not everyone can afford symbolism. And I think Democrats need to admit this is a real problem for them in 2014.

HILL: Are they already admitting that? Some of my best friends are Democrats, and I haven't -- I haven't met one yet that isn't in denial that this is bad: the Web site is bad, the sign-ups are bad, the delay is bad. But the truth is, we're going to turn a corner, and things are going to be fine.

CUPP: Nancy Pelosi says it's going to be a plus. We'll see.

In the CROSSFIRE tonight, Neera Tanden, who helped craft President Obama's health-care plan, and CNN political commentator Will Cain. Marc, as our guest host, I will give you the first question.

HILL: Good. I get to go right to Will Cain. Will, look --

WILL CAIN, CONSERVATIVE COMMENTATOR: Bring it.

HILL: I think you guys are overstating just a bit how bad things are. Over the last weekend, we've seen sign-ups. We've seen young people begin to sign up. We've seen millions of people access the site, and we've seen fewer glitches. What are you going to do when this thing actually starts working?

You said in 2014 that you were going to turn the corner. What I'm going to accuse you of is what you've been talking about with Republicans being accused of for the past several years: wishful thinking. You've said we've hoped for Obamacare's failure. You're now on the side of hope and wishfulness. What you'll see in 2014 -- here's your overstatement -- is the effective nationalization of the health-care industry.

To some extent what I'm saying is anticlimactic. You've got the government dictating the prices of health care, the coverage. And in 2014, what we're going to see is the full-on nationalization. It's a mechanism -- and I'm going to let you rebut what you think I know is absurd. The mechanism is you're going to see the bailout of the insurance industry. Because Obamacare has now set up a system where insurance companies can no longer exist in this environment.

HILL: That's a compelling argument. It's just not true. The thing you're calling hope, the thing you're calling wishful thinking is -- I'm calling data. Right? There are people who are actually logging into the Web site and accessing it. There are millions of people signing up where before there were not. It's just a fact. Just this weekend, we saw 1.2 million people signing up. Doesn't that mean that we're turning a corner? CUPP: But Neera, we are halfway through this enrollment period. We're past the rocky roll-out. Now we're talking about implementing this.

NEERA TANDEN, HELPED CRAFT OBAMACARE: Right.

CUPP: Does something in this law need to be changed for it to work more effectively?

TANDEN: So we actually are seeing a rapid increase in enrollment. So we have 500,000 people on the exchange in December. If you actually tracked what happened in Massachusetts, when Massachusetts passed its law under Mitt Romney, we are way ahead of the sign-ups that Massachusetts had at this same time.

So I'm actually excited about the chance of talking about all these people who have insurance. And the fact is, the Republicans in the next election are going to be talking about taking away people's health insurance.

We already have 4 million people signed up through the Affordable Care Act, through Medicaid, through the exchanges, getting private health insurance, and the Children's Health Insurance Program.

We're going to have something we haven't had in years, which is Republicans talk about repeal. It's actually taking away benefits from people. And I think that will be a good debate for us to have.

CAIN: You know, Neera, you and Marc have now both used the term "signups." And you've touted the number of "signups" over the past month and over the last several days. It's a curious term you keep using, "signups."

TANDEN: Enrolled. OK. Use the term enrolled.

CAIN: Fine, enrolled. We'll use your term. Obamacare's ultimate goal is to deliver health insurance to Americans, and ultimately, beyond that, to deliver health care to Americans. If it's true what you say that hundreds of thousands of Americans have signed up -- by the way, your goal is 7 million. You've got a month or two left to get to that number.

TANDEN: Four months. We have four months to get to that number.

CAIN: And you are way behind. But again, signups. That doesn't mean people send in checks. That means they selected a plan at most. It doesn't mean they actually have been in communication with an insurance company or are receiving false data. You guys are using a unique term, signups, to paint what you think is a rosy picture. If that were true, if the picture you're both painting is true, President Obama wouldn't be delaying the deadline day after day after day.

TANDEN: OK. Let's talk about the delay of the deadline. The delay today is just saying, just like we say for every other program, if you're in line tonight, you'll get health-care insurance. We're not going to stop you at midnight. If you're -- if you're processing your claim, we're going to do this. This is like people acting, trying to get health insurance. We should -- we should reward them.

CAIN: Starting December 1, went to December 15. Now it was December 23, and now it's moved to December 24? Why have you had to move it three times?

TANDEN: Right, all designed to get people covered for health insurance. That's exactly what this is all about. I don't know -- I don't know why it's a negative to you. I guess what I'm saying is we have 500,000 people who have health insurance. As a conservative, I wish you'd applaud that instead of trying to insure that people lose their health insurance.

CAIN: I appreciate you say you have half a million people signed up.

TANDEN: Enrolled.

CAIN: What I see is a net negative of 4 million. You kicked 5 million plus off of their plans and now you have to make up that ground.

TANDEN: N. That's absolutely false. Five million people weren't kicked off their plans. There's 500,000 people. If you look at the data, 500,000 people, you have actually people who will not have a better plan.

We're seeing now data that shows that people though they -- who were getting kicked off their plan have better plans on the exchange. We're seeing stories every day.

CAIN: How many people didn't get kicked off their plans?

TANDEN: No, they've got -- they have -- they've lost their coverage, and they have a better plan where they pay less.

CAIN: So they lost their coverage is what we call it when we get kicked off their plans.

HILL: You're saying the same thing. You're saying they're off their plans, but onto new plans.

TANDEN: Onto better plans. And the exchange -- the big problem we had is that HealthCare.gov didn't work. So people couldn't see there are better options. Now, people are seeing, and you hear story after story about people who are saving thousands of dollars. That's something you should celebrate instead of trying to wrest that health care out of their hands.

HILL: Will, if the numbers are clearly increasing, isn't that a sign that we're turning a corner? If more people are enrolled and are signing up, whatever language you use, isn't that a sign for success?

CAIN: Guys, I'm sorry, but you seem to be living in a dreamland. I assume it's driven by wishfulness, but you started out this program -- S.E. started out this program, 63 percent of Americans think that their health-care costs are going to go up. Forty-two percent think Obamacare is going to be -- make them worse off in their lives. And you point to a few hundred thousand people who clicked on a Web site? Not that sent payment, not received interest.

CUPP: Sounds like an alternate reality. It really does. And let's look at some more numbers. We talked about that number.

Sixty percent of women not into this bill. That's up from 54 in November, despite the president's push to moms just last week. Sixty- four percent of men oppose this law. In California, you only have 20 percent of the young people signed up. You need between 30 and 40. In Kentucky, it's the same.

TANDEN: What you just said is the perfect number. That's what the target is.

CUPP: It's not the perfect number. You need 2.7 million --

TANDEN: Yes.

CUPP: -- young healthy people to sign up to make this law affordable. You are nowhere close.

HILL: Let me jump in a bit. One of the things -- one of the things you all have offered -- and by you all I mean Republicans -- is critique, and not a lot of solution.

One solution that's been offered is to open this up to the free market. The challenge of opening up to the free market is that things like preexisting conditions may not get covered for people, that these efficiency may not work out for the most vulnerable people. How do you reconcile that?

CAIN: The solutions question is a great one. And you and I have had this before, Marc. The problem is we're pulling in opposite directions. Neera and I pull in opposite directions of what we think ultimately delivers the best health care for Americans.

I believe a free market does, because what you can do is actually what President Obama has chosen to do in the last couple days, and that is allow people to buy catastrophic insurance plans. That is insurance plans that allow you, if you get hit by a bus or you get cancer, to have coverage, and everything else -- from knee surgeries to elbow surgeries to you get an infection -- you buy with a price mechanism competitive of the regular free market.

HILL: What about the preexisting condition? What about the person who, because of market efficiencies, can't get their preexisting condition covered? What happens to them?

CAIN: Preexisting conditions are a tough conundrum, because they cannot live in the same environment with the definition of insurance. And eventually, we have to get to what is the definition of insurance? It is designed to mitigate something that has not yet happened. Preexisting conditions have already happened. What you're talking about really is just delivering free health care to those people.

CUPP: I have a photo I want to show you guys before we go to break. We have seen some very desperate and silly and, I think, sometimes even offensive attempts to sell Obamacare around the country. You have those "Ho-surance" and "Bro-surance" ads out of Colorado. You've got Democrats leaving these brochures out at gay nightclubs. We just had an ad marketing Obamacare to gay -- to gay consumers.

What I don't understand is if this is so great, why isn't it selling itself? Why do we see these absolutely ludicrous and desperate attempts at reaching every single person in every corner of the world to try and get onto this program?

TANDEN: I don't know, S.E. Cupp. It looks like Apples are pretty good. Apple still spend $50 million to $100 million selling them. You sell things to people so that they understand what they're getting.

That's why the insurers --

CUPP: You've had three years.

TANDEN: Yes, right now is the time that you get coverage. That's why insurers are actually spending tens of millions of dollars trying to get people covered, because they actually know that this will work, that there is a market out there. If there was no market, they wouldn't spend the money, but they know there's a market; they know there is a demand. People want health insurance. There's actually -- these premiums are coming in lower.

And the fact is that this plan -- these plans are actually working, because people -- there's a demand for them.

You know what I think is fascinating? We have -- the Affordable Care Act is a market, right? People gets subsidies, and then they can go on the exchange and choose the health insurance they want. That's precisely why Governor Romney and the Heritage Foundation supported these plans in Massachusetts, and that's why I think it's interesting -- that's not true -- it's not.

CAIN: The prices, the coverage, every aspect of it. And you guys have compared yourself to Steve Jobs and Apple so many times, it should be embarrassing. You must recognize you have a problem. That's the only way you're ever going to fix it.

CUPP: OK. I am -- I am confident that the Democrats are going to have a tough time next year with this, but Republicans have some problems, too. Next I want to ask my friend Will Cain, conservative to conservative, how can we involve some -- avoid some of the pitfalls ahead?

(COMMERCIAL BREAK)

HILL: Welcome back. In the CROSSFIRE tonight, Neera Tanden and Will Cain.

House Minority Leader Nancy Pelosi assured reporters today that the Affordable Care Act would not be a political problem in the next few months. In reality, it's unlikely that Obamacare will be a plus for Democrats any time soon, but eventually, people are going to stop worries about Web sites and start focusing on economic issues, like Washington's failure to raise the minimum wage and extend unemployment benefits. And that's where Republicans will find themselves back in the same dangerous hole and the target of ads like this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: So to the 1.3 million Americans losing benefits, merry Christmas from the GOP. It's wrong to leave more than a million Americans behind.

(END VIDEO CLIP)

HILL: If Republicans remain tone deaf to America's working people, then Nancy Pelosi is right: Democrats have nothing to worry about.

Will, I know you disagree with everything I just said, but at least you can concede that Republicans are overplaying their hands by ignoring these economic issues and just assuming Obamacare is going to save the day for them.

CAIN: Republicans have been talking about the economic issues of our country for the past three, five years, ever since the recession of 2008 and through Obama's tenure. We've been talking about it for --

HILL: Let me be more specific. Because talking about the economic issues by cutting taxes for the wealthy is not exactly what I mean. I'm talking about the idea of raising a federal minimum wage, creating a living wage for people. I'm talking about the idea of extending unemployment benefits. Two things that are on the table right now.

CAIN: Let's be honest. These are not economic solutions. These aren't even economic arguments we want to have. The truth is everyone knows, you want to dismiss with an economic argument quickly, if you raise the price of something you get less of it. You raise the price of this phone, you sell less of them. You raise the price of labor, you get less of it. That's your minimum wage argument.

The truth is this is a political argument. You want to pivot to talking not about Obamacare, but accusing Republicans of hating poor people.

HILL: And that, sir, is why I'm saying Democrats have nothing to worry about in 2014. I wish -- I thought you guys would have learned that lesson before. The majority of Americans want these increases, the majority of even the Tea Party, the extreme wing of the Republican Party wants this.

CUPP: Why are Republicans getting blamed for this unemployment insurance? Democrats passed this law, the president signed the law. Why are Republicans in the crosshairs over that?

HILL: Because there's so much -- there seems to be Republican opposition to this.

TANDEN: Yes, they opposed putting it in the budget agreement. That's why the Republicans are being blamed for it. CUPP: Democrats made it happen. They needed Democrat votes to pass it. The president signed it into law. Why isn't it a pox on both their houses?

TANDEN: Because the Democrats pushed for it in the budget negotiations.

CUPP: Democrats are nicer people.

(CROSSTALK)

TANDEN: No, it's Paul Ryan and --

HILL: Since you brought it up.

TANDEN: Paul Ryan opposed it. The House Republican leadership opposed putting it in on the budget deal. That's why they're being blamed for it.

CUPP: Look, income inequality is a serious issue. I'm glad the president is finally addressing it. He virtually ignored it for four years and the income inequality gap has widened under this president. But it doesn't bring people to the polls.

Are you telling me Democrats will run on raising the minimum wage? That's the big idea?

TANDEN: Absolutely.

CUPP: I hope so. I hope you're right.

(CROSSTALK)

TANDEN: Absolutely. You know, Republicans, 70 percent of Republicans nationally support it, 70 percent support it in Arkansas, in Kentucky. Look at the state polls.

There's economic populism flowing in those Southern states, those conservative districts, and it's working against Republicans. That's why Allison Grimes is campaigning on it. Michelle Nunn is --

CUPP: Allison Grime is going to win?

TANDEN: She's winning. She's doing very well. She's right now, even in the polls, isn't she?

CUPP: She's not going to win, Neera, c'mon.

TANDEN: Look, I think you should take note of someone who's even in the polls against the minority leader in the Senate.

CUPP: I thought the point is to win, right? You guys want to win in 2014. You want to keep the Senate.

TANDEN: Yes.

CUPP: Maybe pick up some House seats.

TANDEN: My overall point is this is a popular issue amongst Republicans. I'd say to your arguments economic data after economic data shows that when we raise wages, people can buy and consume more. It's a simple concept.

(CROSSTALK)

TANDEN: So people have more money to actually purchase. We have looked at states that have raised minimum wage. Their unemployment has gone down because --

HILL: Hold on a second.

CAIN: The simple rebuttal, Neera, is why don't you raise the minimum to $50 an hour then?

TANDEN: Because we're just looking at today data points of what works. So, let's start with $10. See, if that works, and that's why --

(CROSSTALK)

HILL: You haven't answered the initial question, right? Which was -- if this is the popular consensus of everyday American people on both sides of the aisle, will Republicans lose ground in 2014 by not taking that position?

CAIN: No, I'll answer your political question and then Neera's economic question. But the question of whether or not this will work politically, I agree with S.E. If you guys had decided you want to adopt the Bill de Blasio, mayor of New York City, Elizabeth Warren, senator of Massachusetts, if Massachusetts and New York City are your model no national politics, I wish you luck, my friend.

CUPP: In an off-year --

CAIN: To your economic point --

TANDEN: Neither one of them are campaigning on --

(CROSSTALK)

CAIN: To the economy point you bring up, in the end, I ask you, do you want to raise minimum wage to $50 an hour. You said data points and there's --

TANDEN: Yes, let's start with $10.

CAIN: Let me just suggest this, there's a thread that ties all our conversations took. From Obamacare, to the minimum wage, to inequality, is that you want the American people, and me and S.E. at this table, to grant you the power to, give you, to -- to weighing down to your arrogance that you know the right price of labor, you know how much people should make inequality, and after we've watched you for the last three years mess up the health care market by dictating prices and coverage, you want you to act on the heels of that?

TANDEN: You know what I want -- my only response to that is we have a growing income inequality, we have declining mobility. Maybe your answer is just let everything be as it is. But I think Americans want solutions. A simple solution is a federal minimum wage to insure there's some fairness, if you work hard, 40 hours a week, you should not be resigned to poverty. That I thought was a --

HILL: Will, do you believe there's no room economically for a federal minimum wage increase? Not at all? Forget the $10 mark. Are you saying it doesn't make any economic sense to raise the federal minimum wage?

CAIN: I am absolutely libertarian on minimum wage. I think market should dictate the price of labor, like they have officially done for every other aspect of our society.

CUPP: The federal wage makes no sense because cost of living changes from area to area, from region to region, making $10 an hour in New York is different than making $10 an hour in Topeka.

But I can't let you go Will without asking you this question, because we talk about it earlier. I want to talk about the GOP. And I think we do have a real problem.

Earlier this year, Chris Christie seemed to scold Rand Paul in a speech he gave in Boston. He basically said, we're not a debating society. We've got to win elections.

I think that is the GOP debate of the next year. Are we for principles and purity or are we for winning elections? Which do you think is going to win out?

CAIN: You know, William M. Buckley once said, the goal in every election is to vote for the most conservative candidate available to you. So, the answer, S.E., has to be both. And you and I talked about this off-set. I've heard you talk about it on air.

Mike Lee put this perfectly, when we said our goals should not be to identify heretics in our party. Our goal should be to identify converts.

CUPP: Right.

CAIN: At the end of this, Marc will probably with me on everything, and Neera a few things.

(LAUGHTER)

HILL: If you take that approach, though, right, if you take that approach, don't you end up with a GOP that simply ignores the economic issue that we just talked about? That decides -- do you know what I mean? I'm worried that ultimately the GOP won't take the right position on this.

CAIN: Marc, the goal of the GOP on economics is to find yourself on the most tried and true mechanism of overall growth for everyone in society. And that is to embrace the concept of free market. Not to enable the bureaucrats and politicians who know better the price of labor, or exactly how much everyone should make, but to give it to -- again, the one mechanism that has lifted human beings from poverty to wealth in society, in history, and that is capitalism.

HILL: I'm so excited that you have that position. 2014 is going to be awesome. Just saying.

TANDEN: The same arguments where you used to oppose the deal, which you clearly don't support because you don't support the federal minimum wage. And I think an argument is --

(CROSSTALK)

TANDEN: Let's just have a balance approach to these things.

CUPP: All right. Stay here.

Next, the final question for both of our guests.

We also want you at home to weigh on today's "Fireback" question. Do you think Obamacare will be the biggest issue of the 2014 midterm elections? Tweet yes or no using #crossfire. We'll have the results after the break.

(COMMERCIAL BREAK)

CUPP: We're back with Neera Tanden and Will Cain.

Now, it's time for the final question.

Neera, I know you're optimistic that immigration reform can happen this year. And the president sounded bullish on it as well. Are Democrats willing to accept an immigration reform that does not include a pathway to citizenship?

TANDEN: No, and I don't think they should. I hope that we'll have a bill on the House floor, after -- during the Republican primaries, after the Republican primaries, it seems like people are more interested in the House Republican caucus. And taking that up after the primaries.

But I hope there will be a real conference on this. Now, I think the path to citizenship is really popular. So, it should be 60 percent of the American people, 55 percent to 60 percent of independents support it.

So I think it should be in the time bill. And I think Republicans would do well to support a path to citizenship because that's what's really energizing Latino voters and to expand their base. I think that would be something that they should be interested in.

HILL: Will, the president says he's not going to negotiate on this debt ceiling this time. He's just not going to do it. He said it's all about dead. Republicans are preparing the things they want to negotiate about.

Do you guys learn a lesson from the last standoff?

CAIN: You know, the lesson politically, and I don't want to get too involved in the nuts and bolts of polling and politics, but the Republicans won on debt ceiling, and they did in 2011, and they lose on shutdowns, as they did in the fall of this year. Politically, that's how the public looks it. You can fight over the debt ceiling. You cannot fight over a shutdown.

I would tell you this, as an economic issue -- I do not think the debt ceiling should be used as leverage to extract with probably going to end up being minimal demands. It has huge uncertainty and affects on markets worldwide. And I think, in the end, I'm for economic growth.

CUPP: An agreement there?

TANDEN: I agree.

HILL: We all agree with economic growth.

TANDEN: I agree. I'm not negotiating with that.

CAIN: What did I tell you during the last break? They'd agree with me.

HILL: Everybody supports economic growth.

CUPP: There's a whole host of other issues that President Obama laid out in his inaugural address -- climate change, gun control, what if any of that can get done? It seems like he's had a tough time with this.

TANDEN: Well, the president has a climate action plan, which he put, which it works a lot through executive actions. And, you know, I think, they have to, actually. That's going to be, there are going to be rules coming out from the EPA, et cetera. That's going to be a management challenge for him, and I hope it's one that's successfully done.

CUPP: Why can't he pass the Keystone Pipeline, right? Am I right?

CAIN: Yes, you're right.

(CROSSTALK)

CAIN: S.E. and Marc, he's not going to be able to do anything in 2014 beyond try as he can --

HILL: Not immigration, not Keystone, nothing?

CAIN: Nothing, except through executive action, executive orders. He has bungled it because of Obamacare. It has ruined his legislative capital. And he's going to spend the year trying to fix what is an unfixable problem, Obamacare,